Colgate-Palmolive lifts annual forecasts again on higher prices, steady demand

Colgate-Palmolive (CL.N) last week raised its annual organic sales and profit forecasts for a third time this year, betting on price hikes and steady demand for its self-care and pet nutrition products, sending its shares up 2 per cent in premarket trading.

Global consumer goods companies have been bumping up product prices over the past year to counter spiralling costs linked to raw materials, labour and supply chain.

Price increases helped Colgate-Palmolive boost its gross profit margins by 130 basis points to 58.5 per cent during the quarter ended Sept. 30.

The company said it raised prices by 9.5 per cent in the reported quarter, while a mere 0.5 per cent drop in organic volumes signalled that higher prices have not substantially hit demand.

“Our volume performance improved sequentially from the second quarter, despite continued strong pricing,” the management said in prepared remarks.

Peer Kimberly-Clark (KMB.N) on Tuesday also lifted its annual profit forecast for a third time, while raising the lower-end of its organic sales outlook on the back of higher product prices.

Colgate-Palmolive now expects annual organic sales to grow between 7 per cent and 8 per cent, compared with previous projections of 5 per cent to 7 per cent growth.

It expects full-year adjusted earnings per share growth to be in high-single digits, compared with the high end of mid-single digits it forecast earlier.

Organic sales for the Hill’s Pet Nutrition brand, which contributed about 22 per cent to the company’s sales in the quarter, rose 15 per cent, driven by demand in the US and Europe.

The company’s overall quarterly sales rose 10.3 per cent to $4.92 billion, compared with analysts’ average estimate of $4.81 billion, according to LSEG data.

Excluding items, profit per share was 86 cents, compared with expectations of 80 cents.